Question
Advantages of price skimming include: ability to recover costs quickly, creation of a premium brand image, and targeting of price-insensitive customers. Disadvantages include: potential to alienate customers due to high prices, risk of attracting competition, and it may not be sustainable in the long term.
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Another price strategy execs can use is price skimming, where a company charges the highest possible price as a product enters the market and gradually lowers it as it becomes obsolete. In this slide, the product's price, gross margin, units sold, and projected revenue are charted across four phases to track how each changes over time.
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